Increasing demands for recurrent and capital expenditure, while revenue continues to contract, have led to larger fiscal deficits and increases in public debt throughout Africa. While these debt levels remain sustainable, most of this borrowing has been in hard currency, such as euros and dollars. With higher interest rates and stronger currencies expected in the Eurozone and United States, countries face ‘rollover’ risks and higher debt service costs. Rising debt levels, if not managed carefully, will crowd out public expenditure and compromise long-term growth and financial stability.
This policy dialogue will facilitate discussion on how best debt managers can plan and adjust their borrowing strategies to deal with these challenges and execute a funding plan that balances cost and risk.